U.S. v. Wofford

• Decision Date: 18 February 2009
• Docket Number: No. 08-10126.,08-10126.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. William B. WOFFORD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

560 F.3d 341

UNITED STATES of America, Plaintiff-Appellee, v. William B. WOFFORD, Defendant-Appellant.

No. 08-10126.

United States Court of Appeals, Fifth Circuit.

February 18, 2009.

Marc Woodson Barta (argued), Charles William Brown, Dallas, TX, for U.S.

William A. Bratton, III (argued) (Court-Appointed), Dallas, TX, for Wofford.

Appeal from the United States District Court for the Northern District of Texas.

Before SMITH and SOUTHWICK, Circuit Judges, and RODRIGUEZ¹, District Judge.

RODRIGUEZ, District Judge:

A jury found Defendant-Appellant William B. Wofford guilty of theft from an employee benefit plan in violation of 18 U.S.C. § 664. Section 664 requires that a person embezzle, steal, abstract, or convert funds from an employee benefit plan that is subject to any provision of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"). Wofford challenges the district court's exclusion of his proposed expert's testimony regarding whether the plan was tax qualified and thus subject to Title I of ERISA and the district court's inclusion of a jury instruction that a qualified plan that later loses tax qualified status remains subject to Title I of ERISA, arguing that these actions denied him his right to a jury determination on whether the plan was subject to any provision of Title I. Wofford also challenges the district court's inclusion of a deliberate ignorance instruction on the basis that its submission was not supported by the evidence. Finding no error, we affirm.

I.

On April 25, 2007, a grand jury returned a ten-count superseding indictment charging Wofford with embezzlement from an employee benefit plan, in violation of 18 U.S.C. § 664. The indictment stated that Premier Consulting, owned by Wofford, was an employee leasing company, that one of the benefits it provided to its employees was a 401(k) retirement benefit plan, known as the "Premier Employer's Group 401(K) Plan," and that the Plan was an "employee pension benefit plan" subject to Title I of ERISA. Wofford was the Plan Trustee and a fiduciary.

According to the indictment, paragraph 9.6 of the Plan contained a "Prohibition Against Diversion of Funds" that prohibited "any part of the corpus or income of any trust fund maintained pursuant to the Plan or any funds contributed therefore to be used for, or diverted to, purposes other than the exclusive benefit of Participants, Retired Participants, or their Beneficiaries." Further, the indictment stated that certain provisions of ERISA also prohibited self dealing by a Plan Trustee and fiduciary such as Wofford, specifically listing 29 U.S.C. §§ 1104 and 1106 as forbidding Wofford "from directly and indirectly borrowing money from the Plan and from causing any company that he owned and controlled from borrowing money from the Plan."

The indictment asserted that, "[n]otwithstanding these provisions of the Plan agreement and of ERISA, in the 18 month period between on or about April 28, 2003 and on or about October 6, 2004, Wofford directly and indirectly borrowed, withdrew and used, for his own use and benefit and for the use and benefit of companies and entities in which he had a financial interest, those monies, funds and assets of the Plan described in Counts One through Ten of this indictment, in violation of the Plan agreement and in violation of ERISA." The indictment then charged that "[o]n or about each of the dates set forth in Counts One through Ten ..., William B. Wofford, with fraudulent intent, did embezzle, steal and unlawfully and willfully abstract and convert to his own use and the use of another, in the approximate amounts shown in each Count ..., the moneys, funds, securities, premiums, credits, property and other assets of the Premier Employer's Group 401(k) Plan, an employee pension benefit plan that was subject to Title I of the Employee Retirement Income Security Act of 1974, and of a fund connected with said Plan, by withdrawing and causing to be withdrawn from the A.G. Edwards account holding the funds and assets of said employee pension benefit plan the funds represented by the checks described in each Count."

Before trial, the district court granted the Government's First Amended Motion to Strike Wofford's Designation of Expert Witness, precluding Wofford from proffering an expert witness, David Ralston. The Government asserted that the expert's proposed testimony was irrelevant and should be excluded under Rules of Evidence 401, 402, and 403. The district court concluded that Ralston planned to testify that the Plan was not tax qualified, and found this testimony irrelevant because "an employee plan is still governed by ERISA whether or not it is tax qualified."

The evidence at trial was largely undisputed. The Plan was established in 1995 and amended in 1997. The Plan was administered by third-party administrators until March 2002, when the Plan assets were converted to cash and Plan administration was turned over to Premier. At the time of the transfer, Wofford had sold Premier Consulting. The Plan's account balance was $2,009,473.65, and there were 633 individuals with money in the Plan. Wofford was a Plan participant, and his personal balance in the Plan was approximately $52,494 on March 31, 2002. Wofford transferred the Plan funds to an A.G. Edwards money market account.

Around the same time, Wofford wrote letters to the participants informing them that the Pension Company would no longer be the third-party administrator and that the only investment option available would be a money market account. He also gave instructions for participants to receive distributions and rollovers. Many people responded to the letters asking for distributions, and Premier paid them. One witness, Gabe Morris, testified that he received the letter but wanted to keep the money in the money market account. In addition, some of the letters were returned because the addresses were no longer good, and about $596,332 remained in the A.G. Edwards account at the end of February 2003. At that time, Wofford owned Aircraft Supply Company, Inc. ("ASCI"). He established an Employee Stock Ownership Plan ("ESOP") at ASCI. Wofford filed for personal bankruptcy in February 2003. ASCI was also struggling financially, and Wofford began borrowing money from the Plan.

On April 28, 2003, Wofford instructed his assistant, Patricia Dimmitt, to write a check from the A.G. Edwards account for $47,805 payable to "FOBASCI ESOP" (for the benefit of ASCI ESOP). He also had her type up a promissory note from ASCIESOP to the Plan for $47,805. In September 2003, again at Wofford's direction, Dimmitt wrote two more checks payable to ASCI ESOP, for $60,000 and $40,000, and also prepared promissory notes for those checks. The $60,000 check contained the notation "loan." In January 2004, Dimmitt also prepared checks for $20,000 and $65,000 payable to ASCI at Wofford's direction. Dimmitt prepared a promissory note for $85,000 for those loans. Dimmitt prepared another check for $80,000 on March 22, 2004, payable to ASCI and noted it as a "loan." She also prepared a promissory note. On May 26, 2004, Wofford wrote a check for $10,000 to ASCI from the A.G. Edwards account, but he did not prepare a promissory note. On June 7, 2004, Wofford had Dimmitt write another check payable to ASCI in the amount of $55,000 from the A.G. Edwards account, without preparing a promissory note. Shortly after, Wofford wrote another check to ASCI for $100,000. Last, on October 6, 2004, Wofford instructed Dimmitt to prepare a $5,000 check payable to Precision Aerospace, a new company Wofford had started. Thus, some loans had promissory notes and some did not.

Wofford initially made interest payments on the loans, but ASCI eventually was sold, and no interest payments were made on the later loans. Four participants in the Plan testified that they never received their money. Glen Swan, an auditor for the U.S. Attorney's office, testified that by February 2005 there was less than $1000 left in the A.G. Edwards Plan account. Swan also testified that Wofford owed approximately $390,000 to the fund at the time of trial. Wofford's summary witness, Dale Hogue, testified that over 300 participants had not received their money, and that their money was "in loans" to ACSI and Precision Aerospace.

The district court charged the jury as follows:

For you to find the defendant guilty of a violation of [§ 664], you must be convinced that the government has proved each of the following beyond a reasonable doubt:

First That the Premier Employer's Group 401(k) Plan was an employee pension benefit plan within the meaning of the statute subject to the requirements of Title I of the Employee Retirement Income Security Act, also known as ERISA;

Second That the defendant, either acting alone or aided and abetted by others, embezzled, stole, abstracted or converted to his own use or to the use of someone else other than the rightful owner any money, funds, securities, property or other assets of the Premier Employer's Group 401(k) Plan or of any fund connected with such Plan; and

Third That the defendant acted knowingly and willfully or with fraudulent intent.

"EMPLOYEE PENSION BENEFIT PLAN"

In order to satisfy the first element of this offense, the government must prove beyond a reasonable doubt that the Premier Employer's Group 401(k) Plan was an "employee pension benefit plan" subject to Title I of the Employee Retirement Income Security Act, also known as ERISA. In this regard, an "employee pension benefit plan" subject to Title I of ERISA is:

(1) any plan, fund, or program (with certain exceptions not applicable in this case),

(2) which is established or maintained by an employer or by an employee organization,

(3) that by its express terms or as a result of surrounding circumstances either

(a) provides retirement income to employees or

(b) results in a deferral of income by employees for periods extending to the...